Salem telephone company case study essay

In fact the Data Company had no expenses with In conclusion, for option1 and 2, both will decrease in net income.

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The ratios quantify different aspects of the business and are crucial when looking at the financial state of the company. In fact the Data Company had no expenses with Variable Cost: Power, Operations: hourly personnel. First, we have to divide the various costs incurred in SDS into two types: variable costs and fixed costs. This leads us to believe that STC should give SDS some more time and promotional resources so that SDS can continue to increase its commercial sales, which have increased every month of the first quarter. After three years of operations SDS has yet to finalize a month in positive numbers and the president of STC is faced with the challenge of whether the subsidiary, SDS can be a profitable business. I have just brought in…. What caused the existing system at ETO to fail? Exhibit 1A on the attached worksheet shows the variable and fixed cost breakdown for each month. In the recent year, Salem Telephone Company produced the lowest return on investment to shareholders in seven years. Determining the actual fixed and variable costs will able our group to calculate the unit costs per commercial revenue hours. With Incremental analysis we will be able to calculate the differences in revenue and costs between decision alternatives.

Joe Wilson, VP operations, has experienced an increasing problem with rejected product found during the manufacturing operation. Flores initially believed that Salem Data Services would be profitable subsidiary for the parent company, Salem Telephone Company.

why did salem telephone form salem data services

Which system is preferable? Salem Data Services was established as computer data service firm. The system proposed by the consultant. It is considering whether leasing or buying the new truck necessary to their operations is the preferable method of investment.

Contribution margin income statement

Fixed expenses with respect to revenue hours: Rent, custodial services, computer leases, maintenance, depreciation of computer equipment and office equipment and fixtures, operations salaried staff, systems development and maintenance, administration, and sales, sales promotions, corporate services. Which expenses are fixed with respect to revenue hours? By Salem Data Service had finally overcome the problems experienced during startup and was running smoothly but their reporting had yet to show a profitable month. Option 1 would not be a viable option for Salem Data Services because it still produces a negative net income. Variable and Fixed Costs The variable costs that Salem Data Services incurs with respect to revenue hours are power usage and hourly personnel wages. Fixed Cost: Space cost-rent, Custodial services, Computer leases, Maintenance, Computer equipment depreciation, Office equipment and fixtures depreciation, Operations: salaried staff, systems development and maintenance, Administration, sales, sales promotion, Corporate services. Computer equipment β€” fixed cost as indicated Office equipment and fixtures β€” fixed cost as indicated Wages and salaries: 6. Equipment costs: 3. Moreover, I did not include the corporate services in this list because I assume that Salem Telephone will still have to collect some accounts receivable and will still try to collect on past-due accounts, even after Salem Data Services is closed. Exhibit 5C illustrates this. These calculations can be found in Exhibit 2A on the attached worksheet. Salem Telephone Exhibit 1A on the attached worksheet shows the variable and fixed cost breakdown for each month.

Salem Data Services would perform data processing for Salem Telephone Company as well as sell computer services to other firms. Variable Expenses with respect to revenue hours: Power expense, hourly personnel salaries expense.

The events that led up to the scandal and an explanation of how long the spying went undetected is included along with an evaluation of the results of the punishment incurred by the perpetrators and whether the charges fit the crime.

Salem telephone company case study essay

Wages and salaries: operations hourly personnel β€” salaries paid based on actual number of worked hours.

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Salem Telephone Company Case Study Essay Example